Pressure mounts in US/Mexico poultry dumping case

A bipartisan group of 49 congressmen have written to US Trade Representative Ron Kirk expressing their strong concern about the antidumping duties Mexico has preliminarily assigned to US chicken leg quarters, ranging from 64% to 129%.

Although these duties have not yet been applied in final form, under Mexican law, a final decision will have to be reached by mid-August. “The Mexican antidumping action, when finalised, will severely damage the US poultry industry and the market access provided under the North American Free Trade Agreement (NAFTA),” the letter said.

Early in 2011, Mexican poultry companies petitioned the Mexican government to begin an anti-dumping investigation of imports of chicken leg quarters from the United States, claiming that US companies were exporting chicken leg quarters to Mexico at below-market prices.

This week’s letter to Ambassador Kirk pointed out that Mexico has used a calculation that is unacceptable to the World Trade Organization (WTO) to determine if US chicken leg quarters are “dumped” onto the Mexican market. Using the “average cost of production” assumes that every part of the chicken should be priced at least at this cost. “This assumption is flawed, discriminates against US producers, and concerns us as members from poultry producing districts,” the letter said. “US companies submitted their costs of production information using a value-based cost accounting method–a method well established and recognised by the poultry industry worldwide as a reasonable basis to calculate costs.”

Value-based cost accounting is used by US, Mexican and other chicken producers; is consistent with Mexican financial reporting standards; is consistent with the generally accepted accounting principles in both the United States and Mexico; and reasonably reflects the costs of production of US poultry, the letter said. “Given those facts, under the WTO Antidumping Agreement, Mexico may not disregard the costs of production reported in this case and use average costs instead.”

Mexico is the United States most important poultry market, with over 250,000 metric tonnes imported in 2011, valued at over $275 million.

“As the Trans-Pacific Partnership negotiations continue, we urge you to resolve this situation as promptly as possible and ensure that Mexico honors its commitments under NAFTA and the WTO,” the letter concluded. On April 2, a bipartisan group of 16 senators sent a similar letter to Ambassador Kirk urging the termination of Mexico’s anti-dumping duties.